Dollar hits five-week high ahead of Powell's speech

The dollar rose in European trade on Friday against a basket of major rivals for a second day, hitting five-week highs and on track for the second weekly profit in a row. 

Now investors await an important speech by Fed Chair Jerome Powell later today, expected to include clues on the future of US interest rates.

The Index 

The dollar index rose 0.45% to 104.45, the highest since February 16, with a session-low at 103.92, after closing up 0.6% yesterday, the largest profit since February 13 after a surprise decision by the Swiss National Bank to cut interest rates by 25 basis points. 

The decision comes as Swiss inflation hit 1.2% in February, the ninth month in a row of sub 2% inflation rates. 

The Fed 

As expected, the Federal Reserve maintained interest rates unchanged at 5.5%, a 2002 high, for the fifth meeting in a row. 

The Fed said that recent indices showed that US economic performance is still strong, with high employment gains and weakening inflation, although it remains high. 

Fed Chair Jerome Powell said the FOMC members are committed to bringing inflation to the 2% target, noting that inflation while slowing is still above the target. 

He added that US inflation remains high and the Fed is paying attention to it, and that higher inflation than expected in February didn’t change the Fed’s outlook. 

He added that if the US economy performed as expected, it could be appropriate to start cutting rates this year. 

US Rates

Following the Fed’s meeting, the odds of a 0.25% interest rate cut in June surged to 75%. 

Powell

Now markets await an important speech by Fed Chair Jerome Powell later today, expected to shed more light on the likely path ahead for US interest rates.